American Banker's eighth annual Banker of the Year ceremony last week was both sobering and festive.

New York City during the holidays is by definition a fun place to be, and the Plaza Hotel, where the black-tie dinner was held Thursday, was beautiful. But award winners conceded the current crisis has fundamentally changed banking.

"This is not a time for celebration in our industry, this is a time for hard work," Kenneth D. Lewis, Bank of America Corp.'s chairman, president, and CEO, said as he accepted the 2008 Banker of the Year award.

While praising his fellow honorees, Mr. Lewis wasted little time in what he called self-congratulations.

"It would be easy enough for us to commend one another for a job well done and lay all of the blame for the current situation on the recently departed," he said.

But "it is incumbent upon all of us, especially those of us whose performance has left us in a strengthened leadership position, to help our industry find a new balance between our desire for economic growth and our need for market stability."

Mr. Lewis said he would welcome a reduced, supporting role for the financial services industry as it recovers from its "overdone" growth of the past two decades: "We will be a smaller industry with fewer overall workers and claiming a smaller portion of national income and gross national product. That's not a bad thing."

Lifetime Achievement honoree Jerry Grundhofer sounded a similar theme.

"Banking run prudently is a slower-growth business reflecting overall economic growth," he said.

The retired U.S. Bancorp CEO then uttered a phrase that, to some bankers, is the equivalent of fingernails on a chalkboard.

"Banking is a commodity business where controlling costs and expenses is critical and bankers need to understand that banking, especially for larger banks, is not a 10% revenue growth business over the cycle," Mr. Grundhofer said. "Banks who have that kind of growth will probably pay the price for that at some point in the future."

The $250 billion being invested in banks under the government's Troubled Asset Relief Program was much discussed at the dinner, and when Mr. Grundhofer delivered his list of five wishes for the banking business, this one drew the most applause: "I hope that banks that are accessing the Tarp pay the government back as soon as possible, and before maturity."

Mr. Lewis — who called Mr. Grundhofer "one of the great bankers of our time" — got the audience clapping, as well, particularly when he urged bankers to accept a more humble role in the future.

"Financial services after all are a means, not an end," he said. "Our job is to help the real creators of economic value, people who make things, and people who use them, get together and do business, and there should be some humility in that."

Mr. Lewis also addressed the prospect of increased regulation from the new administration, telling his colleagues and competitors to welcome simplified — but not toothless — government policies.

"In this environment, our industry must not dig in our heels and adopt a stance that opposes all regulation," he said. "We must be clear that bankers don't want less-rigorous regulation, we want clear, efficient, effective regulation that supports a strong and stable financial services industry. And we'll support ideas for reform that move us in that direction."

(True to his comments about working hard, Mr. Lewis left the gala shortly after his acceptance speech to prepare for a Friday shareholder vote on B of A's deal to buy Merrill Lynch & Co. Inc.)

The Merrill deal is part of the industry's reshaping, which Mr. Lewis described: "The financial services industry that emerges from this crisis will look much different. Like the barbell that many have been predicting for years, it will include a handful of very large diversified global banks at one end, and thousands of smaller community banks on the other."

The two men as well as four other bankers were saluted by an audience of roughly 350 bankers and regulators.

Community Banker of the Year honors went to J. Mariner Kemper of UMB Financial Corp. in Kansas City, Mo.; Peyton R. Patterson of NewAlliance Bancshares Inc. in New Haven; and Kenneth P. Wilcox of SVB Financial Group in Santa Clara, Calif.

Janie Barrera of Accion Texas claimed the Innovator award for her success in microfinance.

Federal Deposit Insurance Corp. Chairman Sheila Bair offered some levity as she began her keynote address. She said that as her agency has gained prominence, she has started receiving fan mail. "Most of it has been good," she said. "Some I can't mention for security reasons. And some has been kind of quirky."

Case in point was an e-mail from a guy in California.

"Thank you for all you've done for homeowners. Stay with us," the message said. "And if you ever consider it, Marry me!"

Ms. Bair said her husband, Scott, got a kick out of that, but the FDIC took action.

"We forwarded it to E-Harmony."

On a serious note, Ms. Bair assured bankers skeptical of her plan to modify mortgage loans on a systemic basis: "I am a capitalist. I believe in markets."

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